The Daily Telegraph Prepaid Card
By Faith Archer -
The Daily Telegraph
Pre-pay may be best way when moving money overseas . A new breed of plastic card can ease the pain of foreign purchases, but at a price, discovers Faith Archer.
Transferring money overseas has become easier and safer with the new generation of travel pre-paid cards - although the convenience comes at a cost.
While such cards are a boon to owners of second homes overseas, critics point out they may also help international criminals and tax evaders to export their ill-gotten gains.
Card providers include American Express, the Post Office, Travelex and Western Union. All offer them as an alternative method of taking money abroad, instead of using cash, travellers' cheques, credit or debit cards.
You start by loading money on to the card in a branch, by phone or over the internet.
As the cards are issued under a MasterCard, Maestro, Visa Electron or Amex badge, they can be used like normal credit or debit cards to make purchases or withdraw cash.
The main difference is that you cannot run up debts.
Robert Kenley, from price comparison site moneysupermarket.com, said: "For budget-conscious travellers there is the additional advantage that it is impossible to take out more money than you have put on the card. For the security and budget-minded traveller, pre-paid cards can prove a useful option."
The new cards have a personal identification number (Pin). If your card is lost or stolen, you can get your remaining balance transferred across to a new account, and you will receive a replacement card. As the cards carry no personal information, you also avoid the risk of identity theft.
Rachel Thrussell, from independent statisticians moneyfacts.co.uk, said: "Fast replacement is guaranteed, in much the same way as travellers' cheques. As the cards are operated through cash machines, travellers do not have the hassle and worry of carrying around their passport or having to remember to record the travellers' cheque numbers as they spend."
Pre-paid cards can also be used to transfer money to someone abroad, if you request an additional card to send to someone overseas.
Once you have loaded up the card with cash in the UK, the additional cardholder can then make withdrawals abroad in the local currency. This could prove useful for families who need to help out penniless gap-year teenagers.
Although you pay cash machine charges and foreign transaction fees, a pre-pay card may still be cheaper than a money transfer.
For example, Western Union would charge £37 for a £500 money transfer into euros. If you used a Post Office Euro Travel Money Card, it would cost a total of £25.75 including the one-off £10 to buy the card, plus the 2.75pc foreign mark-up fees and £2 cash machine fee, according to calculations by comparison site www.what-prepaid-card.co.uk.